[V.Narayan]

Originally Posted by McLaren Rulez

As someone quite fascinated by the technology, let me try.

The technology has little to do with its value. The same technology can be and over time will be applied to several other areas.

The economic fundamental that is easiest to see is the elimination of the middleman This is only one of many use cases but a very important one. Getting rid of a middleman in any activity is an obvious source of value.

The fact that the proverbial middleman does not get eliminated in most business areas is because he brings some intangible value. Many socialist governments, bureaucrats and businessmen have spent years trying to eliminate the middle man.

2) You can get USD loans using cryptocurrencies as collateral instantly without a centralized bank, paperwork, etc. (see Maker).

One day the loan has to be re-paid. My sincere advice would be to make sure you wont be repaying out of your life savings. If you assume you will repay the loans out of the increased value of the bitcoins then that could be a fatal assumption. The value can fall further especially as central banks all over the world close in on cryptos.

Originally Posted by Samurai

All these myths have been beaten to death many times before in this thread. No point in repeating that.

Samurai San and I often do not agree. But we are one on this whole business of bitcoins. That itself should be a sign of caution for you.

Originally Posted by McLaren Rulez

Quite the counter argument.

Best of luck. Keep aside enough for your family responsibilities. If you become a multi-millionaire give me a shout. I am up for adoption.

[McLaren Rulez]

Perhaps I should have added it before, although in principle this is not relevant to the discussion, I have not put any money into this space primarily because I simply don't have any! I find that arguments tend to get swayed when real money is involved. With zero skin in the game, my perspective is one of a tech enthusiast, nothing more.

Originally Posted by V.Narayan

One day the loan has to be re-paid. My sincere advice would be to make sure you wont be repaying out of your life savings... If you become a multi-millionaire give me a shout.

I genuinely appreciate your advice and concern sir but I may not be your best bet for a multimillionaire friend. We will have to stick to the roadside tea, not the five star restaurant

Now let's get to the main point - is there economic value that cryptocurrencies can generate? This is not even necessarily correlated with price. A contrived example: If everyone uses Bitcoin to buy pizzas because it is more convenient than credit cards, the price of Bitcoin has no relevance to the simple statement that the platform itself has economic value.

Originally Posted by V.Narayan

The fact that the proverbial middleman does not get eliminated in most business areas is because he brings some intangible value.

I would respectfully disagree here. Take a simple example like travel agents who book plane tickets for you. I have never used one since I book nearly every plane ticket directly with the airline on their website. Online shopping to directly order your new IPhone from Apple instead of going to the physical store is another. It's not for everyone I admit and middlemen like travel agents and electronics stores may still continue to exist. But there certainly are savings for those who use these modes of transaction where the middleman is avoided. The technology that allows this is the internet.

I would also add that eliminating the middleman was just one of many examples. Another would be privacy of transactions for example, which are accomplished using privacy coins that cryptographically guarantee that your spending is untraceable. In the era where data privacy is so important, I see great potential there too.

I could go on but the bigger point is that these possibilities only exist because you have decentralized cryptocurrencies. Maybe the naysayers do end up right and none of these plethora of potential applications end up useful. But the odds of that, in my opinion, are slim.

Originally Posted by Samurai

Cryptocurrency in the current form is an attempt by techies to pretend to be economists. It has failed and they can't even see it.

Again, similar to your previous assertion that it has no fundamentals and zero economic value, these are extremely strong statements. All I will say is that to be that sure of your position in the face of such young technology needs quite a lot of confidence.

[ashokrajagopal]

Originally Posted by McLaren Rulez

Now let's get to the main point - is there economic value that cryptocurrencies can generate? This is not even necessarily correlated with price. A contrived example: If everyone uses Bitcoin to buy pizzas because it is more convenient than credit cards, the price of Bitcoin has no relevance to the simple statement that the platform itself has economic value.



I would respectfully disagree here. Take a simple example like travel agents who book plane tickets for you. I have never used one since I book nearly every plane ticket directly with the airline on their website. Online shopping to directly order your new IPhone from Apple instead of going to the physical store is another. It's not for everyone I admit and middlemen like travel agents and electronics stores may still continue to exist. But there certainly are savings for those who use these modes of transaction where the middleman is avoided. The technology that allows this is the internet.

This thread is quite old and your points are covered and argued on both sides.
In your example, you did directly buy your iPhone from Apple, but both the buyer and seller did trust a middlemen, like Visa or any other payment agency that agrees to carry out the transaction for both. You did not bypass any middle man.
In the finance world, whoever enables your transaction over the internet is your middle man. Bitcoin, if anything is trying to put an end to the middle man by being one. Therefore, the middleman argument is not valid, even if we set all the ponzi-tulip-bogus-fraud arguments (which I dont think should be set aside) aside.

[Samurai]

Originally Posted by McLaren Rulez

Again, similar to your previous assertion that it has no fundamentals and zero economic value, these are extremely strong statements. All I will say is that to be that sure of your position in the face of such young technology needs quite a lot of confidence.

I may be an old guy looking down on young technology. But I am a programmer since 30 years, have dabbled with cryptography over 20 years, and have been an economics junky for 18 years. I see only technology hype, and no economics fundamentals in current crypto world.

The society works because we trust people we interact with regularly. Replacing trust with a piece of software, sounds very cool, but impossible to execute. This article discusses some of the issues with automating trust within any transactions.

[ragh_bhushan]

This thread has been in existence for about 5 years now. Let's take a look at things that have changed over these 5 years.

A couple of things are clear. 2018 was the worst year for Bitcoin. Also, 2018 was the best year for Bitcoin. It just depends upon which metrics you’re focused. Bitcoin is at the forefront of an increasingly complex ecosystem that continues to grow in a variety of ways. And for the tenth straight year, it stubbornly refused to die.

So let's look at different metrics. Quoting most of the text and data from this blog post which has more detailed info and links.

Bitcoin obituaries proclaimed per year:
2010: 1
2011: 6
2012: 1
2013: 15
2014: 29
2015: 39
2016: 28
2017: 125
2018: 93 Link

Academic Interest
Google Scholar articles published mentioning Bitcoin:
2009: 83
2010: 136
2011: 427
2012: 737
2013: 1,570
2014: 3,790
2015: 4.680
2016: 5,470
2017: 10,600
2018: 14,400 (will continue to rise due to listing lag)
Link

Bitcoin Data Anchoring
While you may think of bitcoin as being a cryptocurrency, some users think of it as a trust anchor. By embedding data into Bitcoin’s blockchain, other systems can gain new properties such as tamper evidence and immutability.

The amount of outputs that embedded data into the blockchain increased significantly in 2018, though at time of writing it’s unclear what the most popular OP_RETURN based protocols are other than Omni.

Bitcoin OP_RETURN outputs created in:
2014: 13,000
2015: 655,000
2016: 1,040,000
2017: 2,253,000
2018: 6,750,000

Lightning Network
At the beginning of 2018, the lightning network was mostly on testnet. The mainnet lightning network began forming (against the recommendations of developers) in late December / early January.

Januray 2018 Nodes


December 2018 Nodes


Network Security and Health
Bitcoin's network security accelerated at an average rate of 885 GH/s^2 in 2018


Technical Development
At a protocol level, there was a great deal of work done in 2018. Bitcoin Core and Lightning Network Daemon repositories were particularly active.

2018 commits & contributors, excluding merges from upstream forks:
Bitcoin Core: 3274 | 194
LND: 3050 | 139
geth: 1209 | 219
Grin: 1171 | 70
Zcash: 1026 | 53
Monero: 2084 | 111
Bitcoin ABC: 786 | 41
Dash: 766 | 18
Ripple: 304 | 25
Stellar: 626 | 29
Litecoin: 54 | 7

Conclusion

Most people are only familiar with the exchange rate of Bitcoin, if that. But exchange rate is just one of many metrics we can use to observe the evolution of this ecosystem. While any given metric can be gamed or may be taken from sources that aren’t 100% reliable, by using a diversity of metrics and sources we can get a better rough idea of what’s going on.

Yes, Bitcoin fared poorly in terms of exchange rate in 2018. But by almost any other metric the system is improving and growing. Those of us who are dedicated to this system shall continue to BUIDL and add value; we have no control over the market but I expect that it will catch up to us sooner or later.

Disclaimer: I hold Bitcoins and keeping a close tab on its development especially from technology perspective and feel that the fundamentals have only grown stronger over the years of its existence. As for price this is not the first time it has corrected by over 80% from peak. I do not see any reason why there won't be more boom and bust cycles in the future. I am still baffled by its mere existence and that a piece of code is still worth more than $3,000. I do not know where the bottom for the price is but I am a patient man and think that the price will sooner or later catch up. I do not hold any other "cryptocurrency" as I feel most of them have very weak/no fundamentals and do not have any track record compared to Bitcoin.

[Samurai]

So cryptocurrency is like astrology. It is must be true, because lots of people believe in it.

[SmartCat]

haha! Welcome to the future!

Crypto Exchange Says It Can't Repay $190 Million to Clients After Founder Dies With Only Password
https://gizmodo.com/crypto-exchange-...lie-1832309454

That's why you need a middleman in the financial world. They provide a valuable (but invisible) service to all stakeholders.

[Samurai]

Originally Posted by SmartCat

Crypto Exchange Says It Can't Repay $190 Million to Clients After Founder Dies With Only Password

This was one of the first things that struck me when I started reading up on cyrptocurrency in 2017. See my old comment in 2017:

Originally Posted by Samurai

1) Money without the middlemen like the central bank.
Money prior to central banks were nothing but precious metal with intrinsic value. So this is like going back to using gold/silver as money. That means you are personally responsible for storing your money. You know what they say about taking out the middlemen, you have to do the job of the middlemen. If you store your cryptocurrency in your PC, and your hard drive dies, that money is gone. If your PC is hacked, or your online wallet is hacked, it is gone too.

We are going back to the ancient days. Then people often secretly buried their valuables like gold under the ground or remote places for safe keeping. If they died without telling their legal heirs, that treasure was lost for good. Those good old days are back again.

[V.Narayan]

^^^^^
God Almighty. Would it be rude to burst out laughing

[alpha1]

Originally Posted by Samurai

So cryptocurrency is like astrology. It is must be true, because lots of people believe in it.

But isn't that how "intrinsic value" of goods and services arrived at in an economy?

Lot of people "believing in the requirement of a goods / services" and transacting with each other based on social norms, their own perceptions, wants, demand etc vs what they can offer in return.

[SmartCat]

Once hailed as unhackable, blockchains are now getting hacked
https://www.technologyreview.com/s/6...etting-hacked/

Early last month, the security team at Coinbase noticed something strange going on in Ethereum Classic, one of the cryptocurrencies people can buy and sell using Coinbase’s popular exchange platform. Its blockchain, the history of all its transactions, was under attack.

An attacker had somehow gained control of more than half of the network’s computing power and was using it to rewrite the transaction history. That made it possible to spend the same cryptocurrency more than once—known as “double spend". Blockchains are particularly attractive to thieves because fraudulent transactions can’t be reversed as they often can be in the traditional financial system.

[digitalnirvana]

Originally Posted by SmartCat

Once hailed as unhackable, blockchains are now getting hacked
https://www.technologyreview.com/s/6...etting-hacked/

Hi smartcat, this is not a traditional hack which exploits a vulnerability in the code. It's called a 51% attack and as the name implies if one entity owns majority of the ledger they can change the record. In layman's terms a blockchain or a public ledger is only immutable because it is updated through consensus. If the network isn't used at all (which leads one party to capture more than half of the computing power easily) then it's but natural that it will be taken over.

The real concern here is not that a blockchain is vulnerable - I will worry about that when there are major issues such as quantum computing, or if there is a legitimate issue with how a framework is designed.

The concern is that a big name currency like Ethereum Classic which at one point had billions of dollars of "value" is now junk and worthless much like 90%+ of all currencies.

[V.Narayan]

Robbing the bank the new digital way. Listening to the good old 'African Beat' by Bert Kaempfert and glad I did not invest in bitcoins :-) Every half generation has its bitcoin moment. We had the dotcom Ver 1.0 in the late 1990s, the Harshad Mehta sound & light show in 1991.....!!! When ever someone gives you a scheme that makes you fantastically rich for doing very little other than pressing keyboard buttons and sitting on your backside think not twice but a hundred times. Now come listen to the Mexican Shuffle. Good music.

[Samurai]

This is really getting comical...

https://www.zdnet.com/article/crypto...-spellchecker/

[reignofchaos]

Heh - I had 9 btc in 2011 after running my shiny new 7970 graphics card for 7 days straight. Sold them for around 100$ and was very happy then. Had I mined a bit more and held on to the coins I'd have retired by now. Stupid me!